Correlation Between PAVmed Series and LivaNova PLC

Can any of the company-specific risk be diversified away by investing in both PAVmed Series and LivaNova PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PAVmed Series and LivaNova PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PAVmed Series Z and LivaNova PLC, you can compare the effects of market volatilities on PAVmed Series and LivaNova PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PAVmed Series with a short position of LivaNova PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAVmed Series and LivaNova PLC.

Diversification Opportunities for PAVmed Series and LivaNova PLC

0.65

Correlation Coefficient

PAVmed Series  LivaNova PLC

Poor diversification

The 3 months correlation between PAVmed and LivaNova is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PAVmed Series Z and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC and PAVmed Series is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PAVmed Series Z are associated (or correlated) with LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of PAVmed Series i.e., PAVmed Series and LivaNova PLC go up and down completely randomly.

Pair Corralation between PAVmed Series and LivaNova PLC

Assuming the 90 days horizon PAVmed Series Z is expected to generate 11.18 times more return on investment than LivaNova PLC. However, PAVmed Series is 11.18 times more volatile than LivaNova PLC. It trades about 0.1 of its potential returns per unit of risk. LivaNova PLC is currently generating about -0.08 per unit of risk. If you would invest  0.99  in PAVmed Series Z on December 28, 2024 and sell it today you would lose (0.43) from holding PAVmed Series Z or give up 43.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.44%
Values	Daily Returns

PAVmed Series Z  vs.  LivaNova PLC

PAVmed Series Z

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PAVmed Series Z are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, PAVmed Series showed solid returns over the last few months and may actually be approaching a breakup point.

LivaNova PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LivaNova PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PAVmed Series and LivaNova PLC

The main advantage of trading using opposite PAVmed Series and LivaNova PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAVmed Series position performs unexpectedly, LivaNova PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LivaNova PLC will offset losses from the drop in LivaNova PLC's long position.

The idea behind PAVmed Series Z and LivaNova PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.